I wish to first say that I was terribly skeptical that the war would amount to ANY economic benefit to either the U.S., Iraq, or the world. I've had frequent debates amongst my close group of friends as to the merits of the war. But, based on information that I obtained, I can safely say that this war WILL pay dividends. Whether those dividends actually offset the cost of the war remains yet to be seen.
Over the last few days, the Iraqi Government has held auctions regarding the rights to develop certain properties. According to Al Jazeera, the bidders included 45 separate entities vying for 15 oil fields.
The bidders included Exxon-Mobil, British Petroleum, Italy's Eni spA, Occidental Petroleum, a joint venture between Anglo-Dutch Shell and Malaysia's state owned Petronas, France's Total, Angola's firm Sonangol, and the Chinese-owned CNPC. Quite a list, wouldn't you say?
The winning bidders were the joint venture between Shell and Malaysia's Sonangal and China's CNPC. The Shell-Petronas combination was the winner for the Majnoon field, containing 18 billion barrels in proven reserves, the largest property up for development! China was awarded rights to the Halifya field. Both of these properties are considered to be within areas believed to be fairly stable.
According to the Christian Science Monitor, some fields attracted no bids at all, as they are situated in places involving ongoing internal conflicts with the Kurds. Other fields recieved a single bid, but were rejected as the remuneration sought was too high. As a result, the Iraqi Government said it would develop those fields itself. East Baghdad recieved no bids at all, despite having proven reserves of more than 8 billion barrels!
If all goes as planned, Iraq's oil production will TRIPLE within the next 7 years to 10 million barrels a day, which would probably put it, by that time, as the world's LARGEST producer! Some skeptics suggest that the goals are unrealistic, but they are still confident that production will top at 6 million barrels per day, which would place Iraq amongst the very largest producers. Currently, the entire world produces 85 million barrels per day, which is declining, so this development is quite extraordinary.
I hope you find this informative and interesting. Whether you find it useful, is another story altogether, unless, of course, you're now kicking yourself for NOT being part of the bidding process! If you have any comments, pro or con, please submit them in the comments section below.
Marko's Take
Extremely interesting - but, how will all this impact future price of gold?
ReplyDeleteHi Bd:
ReplyDeleteIn the short term, there will be no effect on gold whatsoever. It will takes years before any meaningful production even begins! However, longer term if the predictions come true, the effect would be to tamper inflation and thus would tend to have a negative effect on Gold. In any event, my personal view is that Gold will have reached its ultimate top BEFORE any impact will be felt by the entire process. I hope this helps answer your question.
Best,
M
As a former Marine, I can't tell you how great this news is. The fact that there is a very bright light indeed at the end of this miserable tunnel called the Iraq War. It's good to know that there is some positive result from the lost Iraqi and Coalition Force lives. We too often lose track of the very powerful questions: Why do we go to war? and What has been gained, if anything? Your article has answered at least a part of these questions.
ReplyDeleteAt the end of the day, I as do many other Marines, believe that there is no such thing as a good war. Only necessary evils. There is never a good outcome from killing. It affects people on both sides of bullets and missiles in the short and long run. But we live in an imperfect world and must balance ideals, intentions and actions to the best of our ability.
Thanks again for shedding some insight into why we fight.
Anon:
ReplyDeleteWell said! I couldn't disagree with anything you said. It makes me feel joy that I, a non-vet, can connect with someone like you has been there.
Best,
Marko